Rate of growth in financial services sector activity slows, report says

Volatility in stocks markets creates sombre mood in sector as firms expect conditions to sour further

The rate of growth in the UK financial services sector continued to slow in the three months to September, a survey from CBI and PricewaterhouseCoopers says.

Sentiment has fallen for the first time since March 2009, as firms anticipate more challenging conditions. A further slowdown is expected in the next quarter, the study warns.

Furthermore, for the first time in two years, firms expect no improvement in profitability.

Of the 84 financial services firms surveyed, 33% saw business volumes rise in the quarter to September, and 24% reported a fall. The resulting rounded balance of +10% is the lowest since June 2010.

CBI chief economic adviser Ian McCafferty said, "The recovery in the financial services sector is continuing but the pace of growth has slowed compared with earlier in the year."

"After a torrid couple of months on global financial markets, the mood has clearly darkened. Uncertainty about future demand, worries about the global recovery and shifting regulatory sands are weighing on sentiment.

"With business volumes predicted to slow further and little growth in income expected, firms are planning to reduce their headcount in the next quarter."